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5 comments

I have moved away from a UBI. In California, the state lottery was sold by “giving” the proceeds to the state’s schools. The enabling law indicated that the lottery funds were not allowed to replace ordinary funding of eduction programs. So, the Lotto was launched and in short order, the Lotto funding was used to displace state funding of programs.

If we give money to the poor, the rich will find a way to siphon it off into their own pockets. Now, instead of a UBI, I think a federal job guarantee is a better option. If done well, federal jobs would make a floor under which commercial jobs could not go. You want $15 per hour as a minimum? You don’t need a min wage law, just jobs available that pay that so that people will not be inclined to take lesser paying jobs.

And for those eschewing “make work” jobs, I agree. There are already on the table so many necessary jobs to be done we will not clear that backlog for generations. Take a look back at the “make work” jobs of the New Deal. The list includes, dams built, bridges built, roads built, National Parks built and remodeled and refreshed. The list of accomplishments is staggering and we are still benefiting from most of those. If all you can think of is make work jobs, you aren’t thinking right.

The UBI would be better if it instead combined into what is called a “negative income tax”. Essentially, everyone’s income, no matter the source (including from capital gains, inheritance, etc), is taxed at a flat rate. At the same time, everyone gets a refundable tax credit. That credit is always credited, even if there is some left over after tax paid is canceled out.

For example, assume the flat rate is 25%, and the credit is $10000.

If someone earns $30000, they pay $8750 in tax, but receive the $10000 credit, which nets out to a $1250 supplement from the government.

If someone earns $40000, they pay $10000 in tax, but receive the $10000 credit, which nets out to no tax and no supplement.

If someone earns $45000, they pay $11250 in taxes, but receive the $10000 credit, which nets out to $1250 net tax paid.

This system can be combined with the elimination of welfare, government, pensions, etc (the NIT replaces them), greatly reducing administrative costs and reducing the size of government. And as can be seen from the numbers, it eliminates the welfare trap (you net income always goes up).

Increasing the safety net this way has other benefits, including (in no particular order):

Reducing job lock. If you are no longer dependent on staying with one particular employer for the sake of your retirement income, it is easier for you to leave for better opportunities, start your own business, etc.

It is easier to escape from a bad situation. For example, if an abused woman is no longer required to stay in an abusive relationship to avoid starving etc, she is more able to leave and get back on her feet

AFAICT it is mostly in experimental conditions or on a really small scale. The closest examples I can find are certain tax credits that are always refundable (even if you otherwise have no income or no taxes to pay) and this one in Israel. But from the description given in the article it looks like there are substantial differences from a NIT.